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Dedicated Pricing Teams Growing More Prevalent for Pharma

Outside of the largest pharmaceutical companies, no more than 50% of
drug manufacturers have dedicated pricing
and reimbursement teams in place. But that percentage is growing,
according to a benchmarking study by Cutting Edge Information.

The study, “Pharmaceutical Pricing Strategy: Maximize Revenue in an
Evolving Economic Climate,” finds that all top 25 companies surveyed
currently have pricing teams in place. The data also show that 50% or
less of top 50, small pharmaceutical and medical device companies have
dedicated pricing and reimbursement teams. Among all surveyed companies,
dedicated pricing teams are relatively new – whereas a few have had
dedicated teams established for five to 15 years, the average age of
these teams is 4.3 years.

“A dedicated team not only raises the pricing team's profile, but
clearly, its presence also carries benefits that affect the bottom
line,” said Michelle Vitko, senior research analyst at Cutting Edge
Information. “A formal team increases communication, ensuring that
pricing decisions are made carefully and thoughtfully, rather than late
in the launch process.”

According to interviewed executives, the key reasons for implementing a
structured pricing team include streamlining communication and maximize
profit. Prior to implementing a dedicated pricing team, one pricing
manager found complications caused by lack of communication for critical
pricing decisions between countries. In these cases, the right
stakeholders were not always informed of prices set in other countries.
Because a low price in one country often leads to low reference
prices elsewhere, it is crucial that companies have streamlined
processes to avoid problems and protect product value.

“Having a dedicated pricing team aware that is held accountable for
pricing activity at the affiliate level is critical to avoiding problems
and ensuring that a product receives the best price,” Vitko said.